Tuesday, September 06, 2016

Does BC Have a Plan B for Resource Communities?

Resource communities and the Plan B question

by Peter Ewart  - 250 News

September 6, 2016

The NEBC Resource Municipalities Coalition based in Northeastern BC has called for the development of a sophisticated natural gas processing industry in the region that could include gas to liquids, methanol production and the manufacture of petrochemical products from natural gas (1).

This comes in the wake of stalled provincial plans to build facilities for exporting huge amounts of Liquid Natural Gas to Asia and other international locations. The provincial government made major promises in the last election regarding LNG production and shipment, including the creation of 100,000 jobs, a billion dollar Prosperity Fund, and $1 trillion in economic activity. However, since then, there has been a major downturn in the oil & gas industry as a whole, as well as corporations ramping up their LNG export capabilities elsewhere and a glut of production on world markets (2).

Towns like Fort Nelson, Dawson Creek, and Fort St. John have been hit hard by this downturn with rising unemployment, municipal revenue problems, and business closures. As Kathleen Connolly, director of the Dawson Creek Chamber of Commerce describes it: “There’s a recognition we have stranded assets here. Our markets are diminishing, so what do we have to do to capitalize on that resource?” (3)

However, some coalition members feel that the province has put too many eggs in the LNG basket. “There is no Plan B in place,” says Bill Streeper, the mayor of Fort Nelson (3).

Certainly, the natural gas resource in northeastern BC has tremendous potential in terms of processing and manufacturing. Literally hundreds of products can be derived from natural gas, including fertilizers, paints, solvents, and plastics (4) (5). Yet, with a few exceptions, this side of the gas resource remains undeveloped in BC.

So, it is positive that northeastern communities have taken on the issue of developing a Plan B, not a small task given the nature of the globalized economy today. In effect, they are tackling one of the greatest problems facing our provincial and national resource economies.

For example, many BC communities depend on resource extraction such as forestry, minerals and metals, natural gas, and energy. Much of this is exported to foreign markets in raw form. There is some processing, especially in forestry, but even that is mostly at the primary or semi-processed level.

However, these local economies have long been plagued by boom and bust cycles which often cause serious economic and social disruption, a recent example being the northeastern region of BC which has a dependence on natural gas extraction and export.

That being said, boom and bust cycles are a component part of capitalist production. However, with the development of a globalized economy, new factors have come into play which are exacerbating the problem further.

The development of a world market has taken place over the last couple of centuries. However, modern day globalization has ramped up the mobility of capital to an enormous degree. Huge amounts of capital from multinational corporations and global financial oligarchs, often fueled these days by central bank liquidity, can swoop around the world at rapid speed in pursuit of the highest return on investment and the highest rate of profit.

But for every action, there is a reaction. Capital that flees one jurisdiction for higher yield somewhere else in the world, often leaves in its wake stranded facilities, unemployed workers and broken communities.

As Charles Hugh Smith points out: “The mobility of capital is an enormous benefit to the owners of the capital, but it creates extraordinary instability for those who are not as mobile.” Or as, Michael Pettis puts it: “If there are imbalances in one country or region, there necessarily must be the opposite imbalances in another” (6) (7).

It also creates a race to the bottom for communities and regions which are forced to compete with others in the world to attract corporate investment by slashing wages, cutting taxes and reducing regulations in their jurisdictions (8).

Even profit-making enterprises can be threatened if multinational corporations can achieve a higher rate of profit elsewhere.

The result of this financialized globalization and pursuit of the highest rate of profit is perpetual instability, aggravated boom and bust cycles, and economic bubbles. No jurisdiction is safe or secure. Even regions that are highly industrialized, like the U.S., Europe and parts of Canada, can have their manufacturing and processing sectors hollowed out, resulting in massive unemployment.

This issue has been brought up again and again in the U.S. presidential race especially by Donald Trump and Bernie Sanders who have repeatedly criticized U.S. based corporations for outsourcing and fleeing the country for other jurisdictions in the world where the rate of profit may be higher.

Their solutions revolve around imposing tariffs of some kind to punish these corporations if they move abroad and then attempt to ship products back into the U.S. market.

At the core of the problem is whether global multinational corporations and the financial oligarchy will be allowed to roam the world like pirates or whether restrictions will be imposed on them which favour the interests of workers, local businesses and communities.

International trade is not a bad thing in itself, nor is the export of raw resources. But in an increasingly globalized world, it becomes imperative to build resilient, well-rounded and diversified local and national economies that are sustainable and have a healthy balance between manufacturing and resource exporting.

That should be the aim, but to achieve it is not easy . Indeed, it is one of the most difficult questions of our time. Imposing tariffs seems like a simple solution, but opens up a whole host of other problems, including possible trade wars.

We need new ways of addressing the issue that are consistent with the times we live in. But, as a first step, we need to discard old dogmas, including the ones that the highest rate of profit must always rule, that multinational corporations should roam the world relatively unrestricted, and that corporate interest should be allowed to trump the national and public interest as in various so-called free trade agreements.

Above all, we need to recognize, as the communities in northeastern BC are doing, that a “Plan B” is not only possible but a necessity, and that we need to have conversations about solutions, not just at the national and provincial levels, but also at the local level.

Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca

“Press Release – NEBC Resource Municipalities Coalition holds meetings with Province.” NEBC Resource Municipalities Coalition website. July 19, 2016. http://www.nebccoalition.com/about/coalition-reports/1747-press-release-nebc-resource-municipalities-coalition-holds-meetings-with-province
Travis, Dermod. “The LNG bubble bursts.” 250 News. July 24, 2016. https://www.250news.com/2016/07/24/the-lng-bubble-bursts/
Bennett, Nelson. “BC has no Plan B for LNG.” Business in Vancouver. Alaska Highway News. August 3, 2016. http://www.alaskahighwaynews.ca/regional-news/lng/b-c-has-no-plan-b-for-lng-1.2315680
Ewart, Peter. “Rejecting dogmas about petroleum and climate change.” April 15, 2016. https://www.250news.com/2016/04/15/rejecting-dogmas-about-petroleum-and-climate-change/
Ewart, Peter. “The role of manufacturing in attaining a renewable-based economy.” 250 News. April 14, 2016. https://www.250news.com/2016/04/14/the-role-of-manufacturing-in-attaining-a-renewable-based-economy/
Smith, Charles Hugh. “Globalization = Permanent instability.” Zero Hedge. October 29, 2014. http://www.zerohedge.com/news/2014-10-29/globalization-permanent-instability
Smith, Charles Hugh. “Forget free trade – Focus on capital flows.” of two minds. com. October 28, 2014. http://www.oftwominds.com/blogoct14/free-trade10-14.html
Parfitt, Ben. “Why BC needs an LNG Plan B.” The Tyee. June 25, 2013. http://thetyee.ca/Opinion/2013/06/25/BC-Needs-LNG-Plan-B/

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